What is Site?
AS per Sl. No. 186 of the table to the notification No. 12/2012-CE, dated, 17.03.2012,
Goods manufactured at the site of construction for use in construction work at such site are exempted, subject to the explanation:
Explanation.- For the purposes of this entry, the expression "site" means any premises made available for the manufacture of goods by way of a specific mention in the contract or agreement.
Now, what is site? If you are constructing a bridge, should the site be in the middle of the river? If you are laying a railway track, is it at every inch of the line?
CBEC had addressed this problem way back in 1999.
In Circular No. , dated 18.05.1999, CBEC clarified:
Representation have been received from the trade regarding difficulties faced in availing of benefit of exemption applicable of goods manufactured at the site of construction for use in Construction Work At Such Site vide Notification No. 5/98-CE dated 2.6.98 (S.No.182). It has been stated that the beams / girders or other fabrication work are not presently manufactured at the site due to traffic problems it could cause (especially in case of flyovers at busy road junctions). Therefore, a separate off road site away from the main site is allotted to the construction company to carry out pre-casting (manufacturing) of beams and girders so that the traffic is not affected. The field formations are denying that exemption on the ground that the off road site, which is used for manufacture is not the site of construction.
2. The matter has been examined by the Board. It has been decided that the expression 'site' may not be given a restrictive meaning and shall include any premises made available to the manufacturer of goods falling under heading No. 68.07 of the Schedule to the Central Excise Tariff Act, 1985 by way of a specific mention in the contract/agreement for such construction work, provided that the goods manufactured at such premises are solely used in the said construction work only.
Subsequently, Board defined ‘site' in the notification itself. But 17 years later, the problem seems to be still alive, thanks to overzealous officers who are above Board and Parliament.
Board's latest Circular states,
It appears that in some field formations, the distance at which goods manufactured at site is used in the project, has been considered as criteria for examining the eligibility of goods for exemption. This is an extraneous criteria not flowing from the language used in the notification, particularly when the expression "site" stands explained in the notification. The eligibility criteria must flow from the plain reading of the explanation of the expression "site" in the notification .
So, the Board directs that each case may be decided taking into consideration the facts of the individual case, examined in light of the clarification given above.
Board has rescinded Circular No. , dated 18.05.1999. But what was the need to rescind this circular, especially when it stipulated that even without the explanation for site, distance is not a criterion?
A similar explanation appears at Sl. No. 144 of the notification. The Board is silent on whether this clarification would apply to that entry also. Though it can be inferred that it would apply, in the interest of ‘ease of doing business', Board should have clarified it.
CBEC Circular No. 1036/24/2016-CX., Dated: July 06, 2016